Plan would convert ferries to liquefied natural gas

Originally published October 23, 2011 at 8:49 pm

Updated October 23, 2011 at 11:01 pm

The state is considering converting its six Issaquah-class ferries from diesel fuel to liquefied natural gas — an expensive proposition to start but one that ultimately could pay for itself in a few years through reduced fuel costs, according to a consultant.

A proposal to convert six Washington state ferries to liquefied natural gas could save nearly $10 million a year, consultants have told top Washington legislators.

The conversions of the Issaquah-class ferries would cost $65 million, but consultant Cedar River Group said the money would be paid back in seven years through fuel savings.

The six ferries have a life expectancy of 30 more years, said Kathy Scanlan, managing partner with Cedar River, who presented a report last week to the Joint Transportation Committee.

The report, authorized by a $100,000 appropriation from the Legislature, comes at a time when ferries are struggling financially, with fewer passengers, the loss of money from the vehicle-licensing tax and rising fuel costs.

Another report by Cedar River found that as ferry fares have increased, the number of frequent-ferry riders has dropped. Fares increased substantially after the motor-vehicle excise tax was reduced in 2000.

If the state were to convert the six Issaquah-class ferries built in the 1980s — the Cathlamet, Chelan, Issaquah, Kitsap, Kittitas and Sealth — they would be the first ferries fueled by liquefied natural gas in the nation.

The tanks would be affixed to the tops of the ferries so that if there were a leak the gas would dissipate into the atmosphere, rather than throughout the ferry.

Norway now operates the only liquefied-natural-gas ferries in the world, with about 16 boats, and Cedar River officials are heading there to investigate before issuing a final report on the proposal in December.

Norway found its capital costs were 20 percent higher than fueling with diesel, but Scanlan noted that liquefied-natural-gas prices are lower in the U.S.

Washington’s ferries now use a blend of biodiesel and ultralow sulfur diesel, using 17.3 million gallons of it in 2010. The report found 22 percent of the fuel went to the Issaquah boats, which carry 1,200 passengers and 124 cars.

The fuel costs account for 29 percent of the 2011-13 biennium budget for ferries.

Cedar River also found that liquefied-natural-gas prices are more stable than diesel costs and should remain lower than diesel over the next several years. One problem, however, is that it would have to be shipped to the state from Wyoming or California, although there is a plant in British Columbia that might be a source.

The report found Phoenix fuels 314 of its buses with liquefied natural gas and pays $1.05 a gallon. It also found B.C. Ferries is considering converting to natural gas.

The state is also planning to build two 144-car ferries — retiring the Evergreen State and the Hiyu. But because it could take 18 months to design a liquefied-natural-gas system on the new boats and the state wants to start work on the ferries next year, it doesn’t make sense for the first 144-car ferry to use liquefied natural gas, said Cedar River consultant John Boylston, a naval architect.

If the state were to pursue the liquefied-natural-gas option, it would need approval of the Coast Guard, which has not yet developed rules for the natural-gas-fueled ferries.

Other findings in the report:

• The cost of building liquefied-natural-gas ferries would be about 20 percent higher than diesel ferries, because of the sophistication of the storage tanks and fuel-piping system.

• Fueling the new 144-car boats with liquefied natural gas would save as much as $1.8 million a year in operating costs, assuming costs of $1.05 a gallon for liquefied natural gas and $3.65 a gallon for diesel.